Pennsylvania Prosperity Project
Background Asked candidate questions in 2006 races for PA House. Details * Pennsylvania Prosperity Project: General Election 2006 Candidate Questionnaire Coordinators in 2006 * David Patti President & CEO Pennsylvanians for Effective Government 116 Pine Street, Suite 202 Harrisburg, Pennsylvania 17101 dave@pennsylvaniaprosperity.org Phone: 717-238-1764 FAX: 717-238-0751 Cell: 717-329-7207 http://www.pegweb.org * Eric Kratz Research Analyst Pennsylvanians for Effective Government 116 Pine Street, Suite 202 Harrisburg, Pennsylvania 17101 eric@pennsylvaniaprosperity.org Phone: 717-238-1764 FAX: 717-238-0751 http://www.pegweb.org * Jessica Albright PA P2 Coordinator Pennsylvanians for Effective Government 116 Pine Street, Suite 202 Harrisburg, Pennsylvania 17101 JAlbright@pegweb.org Phone: 717-238-1764 FAX: 717-238-0751 Website: http://www.pegweb.org Top Issues The top issues were identified by a consensus of the Pennsylvania Prosperity Project Partners -- a coalition of pro-business associations and organizations. Individual associations have been invited to submit more detailed comment which is available below through a hyperlink. Positions expressed by a particular association may not be shared by all Pennsylvania P2 Partners. Check back frequently for additional policy statements and other new content. Health Care Because of the rising costs of health care, many people in PA do not have access or the financial ability to receive treatment. Legislators must reform the health care system so physicians will want to stay and our citizens can have a better quality of life. Health Care (more) Health Care Reform and Cost Containment Rising health care costs are a major problem in Pennsylvania as well as across the nation. The cost of health insurance premiums has been rising at rates far exceeding the rate of inflation for several years. According to the Pennsylvania Health Care Cost Containment Council, in 2004 Pennsylvanians spent over $30 billion on health insurance. Nationally, with inflation around 3%, the average cost for employer-provided health insurance rose by 15% to an average cost of $9,950 per family. These rising health insurance premiums have negatively impacted the business community and its ability to maintain existing jobs and create new jobs due to increased costs. Affordable and effective health care must be accessible for employers and employees. The Pennsylvania health care system is in desperate need of reform. Health insurance coverage must be made available to more individuals. A greater level of accountability for all health care facilities and insurance companies is needed. Investment in new information technology will make the health care system more efficient. A reduction in the number and severity of frivolous lawsuits will help lower insurance premiums. According to the Pennsylvania Health Care Cost Containment Council, in 2003 as many as 1.4 million Pennsylvanians had no health insurance. The percent of uninsured grew from 7.3 percent to 11.4 percent between 2000 and 2003 (Source: U.S. Census Bureau). This fact leads to deeper, more severe problems for the health care system as a whole. The uninsured risk their health by putting off necessary care, causing permanent illnesses and pain. The insured are forced to pay higher premiums because it costs more to treat the uninsured for their illnesses. Also, because of the lack of necessary care, the uninsured miss work, and there is a loss in productivity. Insurers must be held accountable through approaches like public participation in the ratemaking process to ensure premium changes are consistent with actual insurance costs. Healthcare insurers should be encouraged to provide a variety of affordable, comprehensive plans. Among the most vocal of groups advocating an investment in information technology for the healthcare sector is the National Association of Manufacturers (NAM) and the Hospital and Healthsystem Association of Pennsylvania (HAP). Both the NAM and HAP support the investment of more resources in technology to slow the growth of healthcare costs, increase quality and improve patient safety. They and others in the business community advocate for electronic health records, currently used by a small minority of healthcare providers. Finally, frivolous medical malpractice suits are causing headaches for the health care system by significantly adding to the cost of insurance and preventing access to quality care. The threat of lawsuits and excessive monetary awards keep good physicians from coming to Pennsylvania and encourages new physicians to leave with their degrees, thus risking closure of hospitals and the safety of the patients they serve. While patients injured through no fault of their own certainly deserve to be compensated, excessive monetary awards and excessive frivolous lawsuits serve to drive the costs of insurance skyward and risks access to care for patients. The business community and hospitals must encourage legislators to address the abuse of the legal system through these frivolous lawsuits and excessive monetary awards. The business community and healthcare providers must fight to get health care costs under control so that businesses are able to provide health care coverage to employees without sacrificing growth in jobs and capital investment. It is imperative that our legislators address the pressing issue of rising healthcare costs. Click on the following interest groups to obtain their issue statements about health care reform and cost containment. * National Association of Manufacturers * PA Chamber of Business and Industry * Hospital and Healthsystem Association of Pennsylvania * PA Farm Bureau * National Federation of Independent Business/PA Reduce Government Spending Pennsylvania needs to limit the growth of state, municipal and school district spending to end the 'tax and spend' spiral. Reduce Government Spending (more) There are two major reasons why less government spending benefits society. First, lowering government spending means that the government will require less taxes now and in the future. Lower tax rates encourage work, savings, and investment. Beyond the tax argument, lower spending is an economic benefit even if taxes are not lowered. As taxes discourage activities that produce income, government spending will encourage activities that increase the likelihood that government services are spent on certain constituents. Government spending begets more government spending. High government spending creates an industry that seeks larger and larger government budgets. The process of paying for and providing government services is biased against limiting government spending. The benefits of government services are concentrated while the costs are diffused. The costs of government services are spread across all taxpayers. If you wish to view position papers and research from various individual business organizations, please click on each below. Poll: Pennsylvanians Want State Spending Limits National Federation of Independent Business/PA Legal Reform Pennsylvania lawmakers need to end the exorbitant amount of frivolous cases brought to the courts. We must restore fairness, common sense, and personal responsibility to Pennsylvania's legal system. Legal Reform (more) The legal system as it exists today is desperately in need of reform. The proliferation of litigation in America has spiraled out of control and resulted in excessive financial settlements for plaintiffs and trial lawyers. The costs to defend a business from frivolous suits siphons away resources that could otherwise be used to ensure access to quality healthcare, grow a business, create more jobs, and could even result in bankruptcy for some companies or hospitals. We have become a “sue-thy-neighbor” society, disregarding common sense and personal responsibility. Frivolous lawsuits clog the court system, placing a burden on the economy, employers and employees. According to “U.S. Tort Costs: 2004 Update” by Tillinghast-TowersPerrin, tort costs in 2003 were $246 billion. This translates to $845 per person, or nearly $3400 for a family of four. Only 20% of this amount went to the claimants. Many times, legitimate claims become victim to an overburdened system that is in need of common sense reforms. These reforms include but are not limited to: Caps on Non-Economic Damages Pennsylvania does not currently impose caps on non-economic damages. Pain and suffering, emotional distress and other intangible "injuries" fall under the category of non-economic damages. These damages have no direct economic loss or precise value and often times result in excessive awards. Imposing caps on non-economic damages would first require an amendment to the Constitution of Pennsylvania allowing the legislature to consider caps. This process would involve the legislature passing the same amendment in two-consecutive legislative sessions in order to place it on the ballot for voter approval. Limiting Punitive Damages The business and healthcare communities support setting limits on punitive damages to prevent the request of unreasonable settlements. The limitation would prevent unreasonable threats -- which often lead to unwarranted and still excessive rewards -- but it would not take away the ability to seek punitive damages from those found liable. Innocent Seller Protections The business community supports legislation that would protect an "innocent seller" from being sued if all they did was sold a product later found to be defective. As long as the seller did not alter the product or knowingly sell a defective product they could not be held liable. Statute of Repose The business community supports legislation that would establish a time-limit -- i.e. a statute of repose -- (15 years has been proposed for most products) from the time of manufacture in which a liability suit must be brought. The premise behind this is that a manufacturer should not be held liable for a product that worked without incident for a reasonable amount of time before causing death, injury to persons or destruction of property or economic loss. Certain products like tobacco and asbestos, which can take years for physical illness to develop, would be exempt from the statute. Repeal of Joint and Several Liability Through the theory of joint and several liability, Pennsylvania law allows for a defendant in a lawsuit found to be even onepercent liable to be held responsible for the entire verdict. This often results in claimants going after the "deepest pockets" with the greatest ability to pay in hopes of getting the greatest amount of money awarded. The business and hospital communities support legislation in which liability would equal fault. In fact, the Fair Share Act passed in 2002 did reform joint and several liability by replacing it with proportional liability, however, the legislation was ruled unconstitutional by Commonwealth Court because it failed to meet the Constitutional requirement that it only address one subject area. The business community must make our legislators aware of the need for legal reform. If you wish to view position papers from various individual business organizations, please click on each below. National Association of Manufacturers Associated Builders and Contractors National Federation of Independent Business/PA PA Chamber of Business and Industry Hospital and Healthsystem Association of Pennsylvania Pennsylvania Institute of Certified Public Accountants Pennsylvania Farm Bureau Business Taxes We have a complex tax code that is terribly burdensome for not only taxpayers, but Pennsylvania businesses. In developing a tax reform policy, legislators should be focused on economic growth, job creation, and fairness. The CSFT is just one of these burdens that represents a double tax, so Pennsylvania businesses must push to restore the planned phase-out for it. Business Tax Reform Overview Pennsylvania has consistently found itself at the bottom of rankings when it comes to economic growth. An August 2005 report by American City Business Journals found that Pennsylvania ranked 44th in the nation in terms of economic performance over the previous five years. The study focused on growth in population, non-farm employment, per capita personal income and gross state product, comparing the states to one another. One of many reasons for these comparatively low levels of economic growth is the burdensome business taxes imposed on the state's job creators. Pennsylvania is one of only 18 states where corporations have to pay both a capital stock tax and a corporate income tax. Adding to this is the fact that Pennsylvania's rates for both taxes are amongst the highest in the nation. Onerous business taxes make Pennsylvania one of the least competitive states in the nation, thus making the state less enticing for businesses considering relocating and opening up the potential for Pennsylvania businesses to move elsewhere. Below is a look at some of the burdensome taxes and regulations in Pennsylvania: Corporate Net Income Tax Pennsylvania's Corporate Net Income Tax (CNI) is currently 9.99%, making it the 2nd highest in the nation. However, Pennsylvania's CNI rate is a flat rate while Iowa and North Dakota have graduated tax rates where the rates in the highest income brackets are slightly above Pennsylvania's flat rate of 9.99%. The business community must push the legislature to reduce the Corporate Net Income Tax to a more reasonable rate and closer to the national average of about 6%. Capital Stock and Franchise Tax The Capital Stock and Franchise Tax (CSFT) is a tax imposed on the capital stock value of businesses in Pennsylvania, and it is paid regardless of whether a business has net income. While the fiscal year 2005-2006 budget reduces the CSFT from 5.99% in 2005 to 4.99% in 2006, the business community must continue to encourage our legislators to maintain the scheduled phase-out of the CSFT so that it is eliminated by January 2009 as established by Act 23 in the year 2000. Net Operating Loss (NOL) The Net Operating Loss Carry-forward provision allows companies to “carry forward” current losses to later, more profitable years for tax purposes. Currently, there is a cap of $2 million on losses which companies can carry-forward. Pennsylvania is one of only three states in which businesses are limited in the amount of losses they can carry forward to the next tax year to offset profits. According to the Pennsylvania Chamber of Business & Industry, "A full-functioning NOL deduction is an important way of balancing the effect of volatile economic conditions on cyclical businesses and helping new start-up companies." The business community cannot allow Pennsylvania businesses to be held back by economic recessions. We must provide carry-forwards with higher limits or no limits to ensure competition, job creation, and future investment. Estate Tax The estate tax is a burdensome regulation that harms not only the individual heirs directly affected, but also the overall economy as a whole. Small business owners and entrepreneurs depend on inheritances to continue the family business or start new businesses. However, according to Associated Builders and Contractors, one-third of small business owners must give up part or all of their businesses to pay the government mandated estate tax. The estate tax stunts economic growth, restricts opportunity, and prevents social mobility, therefore the business community must encourage our legislators to lessen and ultimately repeal the estate tax. Overall, the Pennsylvania business community must advocate for a friendlier business tax climate in the state so that Pennsylvania businesses are able to compete with businesses in neighboring states, nationally and internationally. The current state business tax climate does not allow for sustained economic growth and job creation and this must be remedied. Click on the following interest groups to obtain their issue statements about business taxes as whole and individual business taxes. National Association of Manufacturers American Hotel & Lodging and the PA Tourism & Lodging Association Associated Builders and Contractors-Keystone PA Chamber of Business and Industry National Federation of Independent Business/PA PA Farm Bureau Pennsylvania Institute of Certified Public Accountants Letter to General Assembly about Sales Tax on Services Regulatory Reform Government regulations create an 'invisible tax' on business. Regulations must be fair, predictable and evenly enforced. The emphasis must be on protection, not paperwork and reporting. Regulatory Reform (more) While the business community certainly respects and understands the need for some regulation and enforcement regarding issues like workplace health and safety, safe transportation of materials, environmental considerations and other operational policies, these regulations should not become unnecessarily burdensome and unpredictable. Strict regulations that require the granting of permissions, approval of permits and constant supervision often result in diminished productivity and profits and therefore they must be handled quickly and efficiently while still being thorough. Clear and consistent regulations are also a must for businesses. Ever-changing regulations lead to confusion and increased costs of production. Regulations that drastically differ from state to state are often a significant hindrance to maximum productivity while at the same time often resulting in non-compliance due to misunderstanding. If in the end businesses fail to meet clear and consistent regulatory standards then businesses themselves agree that they should be subject to applicable fines and disciplinary action. In terms of the crafting of new regulations and the altering of existing regulations, the business community wants legislators and the various regulatory agencies to allow the affected businesses to be a part of the discussions. This allows the business community to present the costs of compliance and feasibility of compliance to proposed new or altered regulations. Allowing businesses to participate in discussions will also make the business community more knowledgeable of the nuances of the regulations and thus they will be able to appropriately comply with them. Open discussion between the regulators and regulated will ultimately lead to a better working environment between the groups and to a more productive, economically strong state. To view policy statements of individual business interest groups regarding regulatory reform, please click below. Regulatory Reform & Associated Builders and Contractors :Small business owners, those who actually create the vast majority of jobs in America, often face unfair and prohibitive regulations that impede their business’ ability to compete. Over-regulation negatively impacts the economy, often without achieving the intended benefits. National Federation of Independent Business/PA - Regulatory Reform: Flexibility for Small Business Small businesses employ more than half of Pennsylvania's workforce, but the regulatory cost per employee to small firms is approximately 60 percent more than the cost to large firms. In fact, the U.S. Small Business Administration's Office of Advocacy reports that small firms – with 20 workers or fewer – spend nearly $7,000 each year, per employee, just to comply with government regulations and mandates. Government over-regulation here at home is a significant barrier to economic growth and good paying jobs. NFIB members believe that small-business owners deserve a seat at the table when government bureaucrats are developing new regulations. Most small employers do not find out about new regulations until after they take affect. An NFIB study found that 82 percent of small-business owners stumble across new rules in their normal course of business. Improving the regulatory process through meaningful small-business input will provide Pennsylvania with a powerful economic development tool that can help regulators and job creators to work together to protect important public policy goals such as environmental quality, travel safety and workplace safety without sacrificing jobs and family financial security. An amended version of regulatory flexibility legislation, HB 236, was approved by the Pennsylvania House of Representatives in May 2005. NFIB supported the amendments to HB 236. One amendment would change the definition of a small business within the legislation to 100 or fewer workers and gross sales of $6 million or less. The other amendment calls for an 18-month statute of limitations on judicial review. Contact your state senator and representative and tell them you will not let Gov. Rendell get the last word with his veto of regulatory flexibility for small business. Ask them to co-sponsor new legislation being introduced by Rep. Pickett. Let your state lawmakers know the cost to your business – in time and money – to comply with state regulatory mandates. Regulatory Reform from American Hotel and Lodging Association and PA Tourism and Lodging Association AH&LA supports reform efforts that will result in a regulatory process which is more open, fair, and allows for greater public participation. In order to run a busy hotel or motel, a manager of a lodging property must navigate through the growing maze of laws, permits, and regulations. It is estimated that in 1996, federal regulations cost our nation's economy $677 billion, and is expected to top $720 billion by the year 2000. Complying with regulations raise the price of most products and services as well as tying up funds businesses can use to hire additional employees, modernize facilities, or operate more productively. Federal regulations are too often written by Washington-based bureaucrats with little practical knowledge of business operations, and with little input from those most affected by proposed rules. Federal regulations cover many diverse segments of a lodging operation such as accessibility to disabled customers, blood borne pathogen exposure, family and medical leave, hearing-aid compatible telephones, minimum wage, new employee verification, payroll tax deposits, teen labor, tip income audits, and W-2/W-4 Forms. In August of 2003, the Bush Administration proposed new standards that would require federal agencies to seek independent peer review for many new regulations before they could take effect. These standards would apply when a regulation’s estimated cost to private firms exceeds $100 million per year and entities challenge the quality of the scientific data allegedly supporting the proposal. Pennsylvania Institute of Certified Public Accountants and Substantial Equivalency with Reform Overview Substantial equivalency is a regulatory concept that will allow CPAs to operate across state borders with greater ease. If a CPA has a valid license from a state with CPA licensing criteria that are "substantially equivalent" to those outlined in the Uniform Accountancy Act (UAA), then the CPA can cross state lines to practice in another state without obtaining a separate license in that state. The CPA, however, must notify the state board of his or her intent to practice and agree to follow the law and rules in that state. But if a CPA moves or relocates his or her principal place of business to another state and establishes a practice or employment there, then he or she must obtain a reciprocal license in that state. In this case, the application process would be streamlined if the CPA comes from a substantially equivalent state. Why It's Important to CPAs CPAs who practice across state lines, or who serve clients in another state via electronic technology, would not be required to obtain a reciprocal or temporary license if they hold a valid license from a state deemed substantially equivalent, or if they are individually deemed substantially equivalent. In light of the globalization of business and the effect technology has had on the ability of CPAs to serve clients regardless of their physical location, the concept of substantial equivalency is a crucial contribution to the profession and the public it serves. PICPA Position The American Institute of Certified Public Accountants/National Association of State Boards of Accountancy Joint Committee on Regulation of the Profession developed the concept of substantial equivalency. In the Committee's Final Report, the provisions for substantial equivalency were outlined, and the language was incorporated in the current edition of the Uniform Accountancy Act (UAA) as Section 23. For a state to meet the criteria for substantial equivalency, it must meet or exceed the following requirements for initial licensure: * 150 hours of education * The Uniform CPA Examination * One year of experience prior to certification The PICPA strongly supports the enactment of substantial equivalency in all licensing jurisdictions and stands ready to assist any state in achieving this goal. Other issues * http://www.growthevote.org/page.asp?g=PENNSYLVANIA&content=Other_Issues&parent=PENNSYLVANIA category:FAQ category:organizations